Case Analysis 1 Q1 a The city of Houston made a $10 million public investment in the arts five years ago and the citizens of Houston are getting a 54% rate of retum on their tax investment. What kind of proceeds from the investment in the arts is being made? Q1 b You are considering purchasing a new punch press machine. This machine will have an estimated service life of 10 years. The expected after-tax salvage value at the end of service life will be 10% of the purchase cost. Its annual after-tax operating cash flows are estimated to be $60,000. If you can purchase the machine at $308,758, what is the expected rate of return on this investment? (a) 12% (b) 13.6% (c) 15% (d) 17.2% Q1 c You are purchasing a factory for $450,000. Your projected cash flow streams from the factory will be $132,000 in year 1, $150,000 in year 2, and $280,000 in year 3. What is the rate of return on this factory investment? Q1 d A typical discounted price of a AAA battery is $0.75. It is designed to provide 1.5 volts and 1.0 amps for about an hour. Now we multiply volts and amps to obtain power of 1.5 watts from the battery. Thus, it costs $0.75 for 1.5 Watt-hours of energy. How much would it cost to deliver one kilo Watt-hour? How does this compare with the cost of energy from your local electric utility at $0.10 per kilo Watt-hour